FEWER than five per cent of Travellers have defaulted on loans taken out through a credit union to pay for a new caravan or the upgrading of their existing one.

A new report published today claims the findings prove that “micro-lending works” and says there is a critical need for a state backed personal micro lending scheme, to allow people on a low income across the population in general, to access credit.

Around 900 Traveller households throughout the country are still living in caravans or temporary structures as their primary home, a report commissioned by National Traveller MABS has revealed.

Focusing on a group of 21 Traveller families who had taken out loans of around €5,000 through the Caravan Loan Guarantee Scheme to pay for a new caravan or to repair an unfit one, they found 15 of the borrowers were young women, while six were men.

Most - at 14 - live in Dublin, with the six remaining borrowers living in Co Wicklow. All except one live on an official halting site and 17 out of the 21 cases had children.

Couples accounted for the majority of loans - with 14 out of the 21 clients married at the time of drawdown, while the rest were separated, single or widowed.

All borrowers were unemployed at the time of being given the loans with most on Jobseekers’ Allowance. One Parent Family Payment and Disability Allowance was also stated as the primary source of income, with child benefit a secondary source in the majority of cases.

The average net recorded household income was €412.55.

Most of the loans were taken out during the Financial Crisis, with a steady increase in loans up until 2014 when the Caravan Loan Guarantee Scheme ceased.

The authors of the report say these were loans extended to those without credit histories and so were considered ‘risky’ borrowers by financial institutions.

They note these loans were “very much affordable”, with repayments for 19 out of the 21 cases taking up less than 13pc of the household income and in most cases taken at source from Social Welfare payments.

The report says it proves loan guarantee schemes can work successfully “provided they are constituted and administered appropriately” and that credit can be affordable by those on low incomes.

But it warns that there is widespread financial exclusion amongst members of the Traveller community and said there is a critical need for a state backed personal micro lending scheme that would include an accessible application process, engagement with money management support and the provision of repayment deduction at source.

In 2008, Dublin City Council discontinued the provision of caravan loans to Travellers living in their catchment area due to high levels of default.

Loans for this purpose had previously been provided under a Department of Environment and Local Government Scheme.

However, it was recognised by the Traveller Welfare Section within the City Council that Travellers would still need to access credit at reasonable rates to purchase caravans.

Meanwhile the report warns the below anticipated take-up of the government’s Basic Payment Account Pilot – an EU initiative designed to provide people to a right to a basic bank account regardless of their financial situation or a place of residence – suggests that it is unlikely that vulnerable groups such as Travellers will be able to access mainstream financial services any time soon.